SU 5: Winding up, Business rescue and Deregistration
Life of a
company
Incorporation -
operatione Dissolution
companies have debtors and creditors
when is to be dissolved its Assets are collected
going
-
company
:
a
-
Assets are converted into cash
Creditors are paid to their order of preference
according
-
Remaining money/assets are distributed to shareholders
-
This is called
winding-up
·
process .
Winding up : the process of dissolving a
company by collecting
its assets
converting
, them to cash ,
paying creditors
and
distributing any remaining assets to shareholders
Role of
winding up
Purpose of
winding up
:
winding up
↓
Collect assets
company
↓
Convert assets into cash
↓
Pay creditors
according to preference
↓
Distribute remaining assets to shareholders ->
winding up brings the
companys
existence to an end.
The main purpose is to ensure that
the
company debts are properly
dealt with before dissolution.
·
Mutatis Mutandis : with the necessary changes or modifications
·
Solvent
company
: a
company can
pay its debts (Assets liabilities)
Insolvent company : a
company that cannot pay its debts &Assets < liabilities)
, Winding up of solvent companies
c
Voluntary winding up Started by the shareholders
>
-
order of the court
Winding up by court order Is company is wound up through an .
voluntary winding up
·
How does it start ?
Shareholders
↓
Special resolution
↓
Winding-up begins
Voluntary winding-up of solvent company is initiated
by shareholders through special resolution
·
a a
A of
special resolution requires 75% or more the
roting rights.
·
creditors have no role because the is solvent
·
company
The process is generally simpler and faster
creditors are not threatened because the companys assets exceed its liabilities
·
.
Process of
voluntary winding up
1) Special Resolution
shareholders pass a special resolution
2) File with CIPC
The resolution , notice and prescribe fee must be filed with CIPC
3
. ) security for debts
Before filing the company must provide sufficient to the master for payment of its debts
security
·
,
within a maximum of 12 months
OR
The company can obtain the Masters consent to dispense with security if it has no debts
·
master : The Master of the High court
supervises certain processes involving deceased estates and insolvency/
liquidation matters
CIPC (Companies and Intellectual Property Commission) :
the body responsible for , among other
things company
,
registration and related
company administration in SA
.
4
. ) Liquidator : A person appointed to
manage the winding up of a
company , including dealing with its assets
and creditors
paying
Life of a
company
Incorporation -
operatione Dissolution
companies have debtors and creditors
when is to be dissolved its Assets are collected
going
-
company
:
a
-
Assets are converted into cash
Creditors are paid to their order of preference
according
-
Remaining money/assets are distributed to shareholders
-
This is called
winding-up
·
process .
Winding up : the process of dissolving a
company by collecting
its assets
converting
, them to cash ,
paying creditors
and
distributing any remaining assets to shareholders
Role of
winding up
Purpose of
winding up
:
winding up
↓
Collect assets
company
↓
Convert assets into cash
↓
Pay creditors
according to preference
↓
Distribute remaining assets to shareholders ->
winding up brings the
companys
existence to an end.
The main purpose is to ensure that
the
company debts are properly
dealt with before dissolution.
·
Mutatis Mutandis : with the necessary changes or modifications
·
Solvent
company
: a
company can
pay its debts (Assets liabilities)
Insolvent company : a
company that cannot pay its debts &Assets < liabilities)
, Winding up of solvent companies
c
Voluntary winding up Started by the shareholders
>
-
order of the court
Winding up by court order Is company is wound up through an .
voluntary winding up
·
How does it start ?
Shareholders
↓
Special resolution
↓
Winding-up begins
Voluntary winding-up of solvent company is initiated
by shareholders through special resolution
·
a a
A of
special resolution requires 75% or more the
roting rights.
·
creditors have no role because the is solvent
·
company
The process is generally simpler and faster
creditors are not threatened because the companys assets exceed its liabilities
·
.
Process of
voluntary winding up
1) Special Resolution
shareholders pass a special resolution
2) File with CIPC
The resolution , notice and prescribe fee must be filed with CIPC
3
. ) security for debts
Before filing the company must provide sufficient to the master for payment of its debts
security
·
,
within a maximum of 12 months
OR
The company can obtain the Masters consent to dispense with security if it has no debts
·
master : The Master of the High court
supervises certain processes involving deceased estates and insolvency/
liquidation matters
CIPC (Companies and Intellectual Property Commission) :
the body responsible for , among other
things company
,
registration and related
company administration in SA
.
4
. ) Liquidator : A person appointed to
manage the winding up of a
company , including dealing with its assets
and creditors
paying
